17 N.J. Eq. 87 | New York Court of Chancery | 1864
The material question involved is, whether, upon a bill filed by a mortgagee for foreclosure and sale of mortgaged premises, the mortgagor may by his answer set up usury against the claims of other mortgagees, who are made co-defendants, or whether he will be driven to a cross-bill, and thereby deprived of his defence. A decree between co-defendants may be grounded on evidence between plaintiffs and defendants. It is declared by Lord Eedesdalo
If the defendant asks substantial relief either as against the complainant or a co-defendant, or a discovery, a cross bill may be necessary. But the court dispenses with the necessity of a cross-bill, where the whole matter is before the court, and the party is not thereby deprived of any of his substantial rights by a decree in the existing suit. Ames v. N. J. Franklinite Co., 1 Beas. 66.
Upon a bill for forclosure and sale of mortgaged premises, all the subsequent encumbrancers are necessary parties, and to effectuate a complete decree, the existence, validity, order of priority, and amount due upon the several mortgages, must be settled and decided. The rights of each mortgagee defendant are as fully established as those of, the complainant, and the decree is as conclusive against the mortgagor, both as to the validity and amount of the several mortgages, as though a separate bill had been filed, and decree made upon each. It is, to all intents and purposes, a foreclosure suit by each of the encumbrancers against the mortgagor. As against the complainant, the mortgagor may allege and prove that .the mortgage is usurious. Why not, as against every
It is urged that permitting the mortgagor to set up usury without filing a cross-bill, deprives the defendant mortgagee of the benefit of his answer. But if he were complainant seeking to enforce his mortgage, he could have no benefit of an answer to the defence of usury. He must file a replication, and go before the master upon substantially the same pleadings and proofs that he will do as defendant.
The fact cannot bo disguised, that the encumbrancers are before the court seeking to enforce their claims. The mortgagor is here in the character of a defendant, resisting the enforcement of a claim which he insists is usurious and void. He asks the protection which the law gives to every defendant against whom a usurious claim is sought to be established. Courts of equity follow the law, in the construction of the statutes against usury. If the lender come into equity seeking to enforce the contract, the court will give effect to the statute, and declare the contract yoid. But if the borrower seeks relief against the contract, the court will prescribe the terms of its interference. It will not actively interfere for the relief of the borrower, unless he will pay what is justly due. The principle of the court is, that he who will have equity must do it, So if a discovery is necessary to aid him in a defence at law or otherwise, equity will not require the defendant to answer under oath, and thus be a witness against himself in a matter which will subject him to a penalty or forfeiture, or to any loss in the nature of a forfeiture. 1 Story’s Eq. Jur., § 301; 1 Fonb. Eq. 25, note h; Fanning v. Dunham, 5 Johns. Ch, R. 143; Livingston v. Harris, 3 Paige 533-4; Whitmore v. Francis, 8 Price Exch. 616. And it makes no difference as to the nature of the relief granted, that the remedy against the usurious contract is sought by cross-bill. Mason v. Gardiner, 4 Bro. Ch. R. 322, and note 2; Fulton Bank v. Beach, 1 Paige 433; Miller v. Ford, Saxton 364.
The principle of all the cases is, that if the defendant asks
The mortgagor is asking no favor. He is not in a position in which terms may be imposed upon him. The court is not at liberty to interpose or withhold the exercise of its powers at its discretion. The mortgagor relies upon his legal rights, and the court are bound to protect them. Hor has the third mortgagee any right to object that he is made a party unnecessarily, or brought into court against his will, or for the mere purpose of having his mortgage redeemed. The answer alleges that he is in fact the actor. That by collusion with the complainant, he caused the suit to be instituted, having first dismissed a bill which he had exhibited in his own name for the foreclosure of his mortgage, and to which the mortgagor had set up usury as a defence. These circumstances clearly take the case out of the operation of the decision in Hudnit v. Nash, 1 C. E. Green 550. They show that so far from the third mortgagee being brought by other parties unnecessarily, or involuntarily, before the court, he is in truth the actor, seeking under the color of the complainant’s rights, to deprive the mortgagor of the protection of the statute as against a usurious claim.
In this aspect of the case, I think the mortgagor was justified in setting up in his answer, those matters which the master has regarded as irrelevant. Viewed in reference to the claim of the complainant they clearly are so, but as against the claim of the third mortgagee, who is made a defendant by the complainant in order to the enforcement of his own rights, the allegations cannot be regarded as irrelevant or impertinent. They were obviously designed to remove the difficulties
I think all the exceptions taken to the defendant’s answer should have been disallowed by the master.
The order will be made accordingly.